2017S1 PracExamQuestions Answers - ACCT1501 Practice Exam...

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ACCT1501 Practice Exam Questions & Solutions 2017S1 QUESTION 1 Accounts Receivable (8 marks) A company records an allowance for doubtful debts. On 1 July 2015, the allowance has a credit balance of $15 000. i) Sales for the year to 30 June 2016 are $350 000. Prepare the journal entry to recognise a bad debts expense based on 2% of sales.
1 (2 marks each section, no part marks)
ii) On 1 May 2016 a customer owing $1000 goes bankrupt. Prepare the journal entry to write-off the bad debt.
iii) Assume the journals for parts i) and ii) have been processed. An ageing analysis of outstanding debts finds that the balance of the allowance at 30 June 2016 should be $25 000. Prepare the adjusting journal entry.
iv) Prepare the closing journal entry for bad debts expense
ACCT1501 Practice Exam Questions & Solutions 2017S1 QUESTION 2 Inventory (15 marks) The following information relates to inventory transactions of Promises Ltd for the month ending 30 June 2016: Date Cash Purchases Cash Sales Balance 1 June 100 units @ $10 10 June 80 units @ $12 18 June 140 units @ $20 25 June 30 units @ $14 30 June 50 units @ $25 Promises Ltd uses FIFO (first-in-first-out) and perpetual inventory control. Calculate the cost of goods sold based on the costs of units sold. (3 Marks)
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3 MARKS FOR THE CALCULATION Prepare the journal entries for inventory purchases and cost of sales for the month of June 2016. (12 Marks)
ACCT1501 Practice Exam Questions & Solutions 2017S1 3 25 June 30 June Inventory Cash (30 x $14 = $420) Cost of goods sold Inventory [(40 x $12) + (10 x $14) = $620] 420 620 420 620 4 MARKS: 2 MARKS EACH FOR INVENTORY PURCHASE JOURNALS 4 MARKS FOR COST OF SALES ENTRY 18 JUNE 4 MARKS FOR COST OF SALES ENTRY 30 JUNE
ACCT1501 Practice Exam Questions & Solutions 2017S1 4

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